Basically the Aussie dollar was nearing parity with the US because of the Resource story. Australia has lots of resources which have been in strong demand from China / India etc.
Now with the Global financial uncertainty and possible imminent recession Resource stocks aren't as popular. Market sentiment is that the world may not need as many resources in the short term.
Like Brandon says, It will come back but it will take some time.
ps
You're not alone there Andrew, I could name my portfolio 'The Red Sea'